Refinancing your mortgage loan is done for many reasons. One of the biggest reasons is to take advantage of lower interest rates, thus reducing your monthly payment.
Are you hoping to cash out some of your home equity with a refinance? Maybe you’re planning a special vacation; you have to pay college tuition for your child; or you are planning some home improvements. In this case, you will want to get a loan higher than the balance remaining on your present mortgage. However, if your interest rate is high now and you’ve held it for quite a few years, you could be able to accomplish your goals without an increase in your mortgage payment.
Do you want to pull out some of your equity to consolidate additional debt? Great plan! If you have a fair amount of equity, taking care of other debt with rates higher than your mortgage (credit cards or home equity loans, for example) might help save you a lot of cash every month.
Are you dreaming of paying off your loan sooner, while beefing up your equity quicker? Then, you want to find out about refinancing to a short term mortgage loan – such as a fifteen-year mortgage loan. The mortgage payments will likely be more than with a long-term mortgage loan, but the pay-off is: you will pay substantially less interest and will build up equity quicker. However, if you have held your existing thirty year mortgage for a number of years and the remaining balance is relatively low, you could be able to do this without increasing your monthly mortgage payment — you might even be able to save!